Who Pays the Bills When You File Bankruptcy?
Filing for bankruptcy in New York City means that you’ll be able to get out from under many debts all at once. This is an option for those who have insurmountable debt that they have no way of tackling on their own. There are two main types of bankruptcy that can be filed in the state of New York, and which you choose will determine how the debts that you do have will be paid off. However, if you’re looking for the answer to “who pays the debt” when you file bankruptcy, the answer is still you. Here’s how it works:
Chapter 7 Bankruptcy
With a Chapter 7 bankruptcy, some percentage of your debts will be paid back through the sale of any assets you may have. There are exemptions, or certain assets that are protected by law that cannot be seized in the event of a bankruptcy. This ensures that you don’t lose every single thing you own in an attempt to get your head above water. How much of your debts you’ll pay will be determined by the judge or bankruptcy trustee who is in charge of selling your assets to recoup the costs of your debts.
Of course, this does mean that if you have no assets that can be seized, and you are awarded a Chapter 7 bankruptcy, then your creditors will get nothing. In this case, the debts will be written off as a loss to the debtor, and they can attempt to recoup some of the costs in their taxes or through other revenue streams.
With a Chapter 7 bankruptcy, you are still the primary source of payment for a percentage of your debt, and that payment is taken all at once through the seizure and sale of allowable assets.
Chapter 13 Bankruptcy
In a Chapter 13 bankruptcy, you are telling the courts that you have a lot of debt that you wish to consolidate and pay off over a course of three to five years. This process will restructure your debt rather than get rid of it, though it often includes reducing many of your debts down to a fraction of their current cost.
Through this type of bankruptcy, the trustee instead acts as your financial officer, taking your monthly payment and redistributing it to all your unpaid lenders. This process allows you to stop harassment by multiple lenders, and better plan your budget thanks to a set payment for all your debts, as determined by the courts.
In this type of bankruptcy, you are still the primary source of payment for all or some of your debts. How much you pay, the percentage of your debt that will be paid, and how long your payment plan is, will be determined based on your available income rather than the value of your assets.
You Pay Your Debts – In Easier and More Affordable Ways
As you can see, the only way to truly get out of paying any debts at all is if you are awarded a Chapter 7 bankruptcy with no assets. This is very rare and most people won’t get this kind of ruling unless creditors have broken the law. In most cases, you are still going to pay back some of your debts when you file bankruptcy in NYC – it will just be in an easier and more affordable way.
Get a Free Bankruptcy Consultation
Are you interested in getting out from under a pile of debt? Find out how we can help you keep your costs low by calling us for a free bankruptcy consultation. Our office can be reached at 212-244-2882.